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Burundi: Horizon Scanning 2022

Africa Connected: Issue 7

By Claver Nigarura

What is the single biggest legislative change on the horizon in the next 18 months?

Burundi intends to take advantage of the mining sector to propel its economy. The country has 6% of the world's nickel reserves and also has reserves of gold, tantalum, tin, tungsten, rare earth elements and industrial minerals, including kaolin, phosphates and limestone.

The mining sector is currently governed by law no. 1/21 of 15 October 2013, of the Burundi mining code. This text made it possible to rationalise, consolidate and increase mining activity both in terms of research and operations. However, it has been observed that this legal framework is no longer in line with the development of the local mining sector and the new orientations of national policies, in particular the National Development Plan, the 2020 mining policy and international policies such as the Millennium for Development, and the African Mining Vision.

The Burundian authorities have therefore suspended the operations of several international mining companies, believing that the country does not benefit from a fair share in the income generated by the extraction of the country’s resources. This decision was taken because of the mining code. Burundi has high expectations of its industrial mining sector, but its income has so far been less than expected.

The revision of the mining code is necessary to correct this and to proceed with a rebalancing to maintain the attractiveness of the sector and guaranteeing a mutually advantageous partnership between the state, investors and local communities. The adaptation of the legal framework in the mining sector is also provided for in the Priority Action Programs 2018-2022.

The Burundian commercial sector remains underdeveloped with a deficit trade balance. Exports are predominantly unprocessed products and relate mainly to traditional export crops (coffee and tea). The revitalisation of trade provided for in the Priority Action Programs 2018-2022 aims to establish dynamic and wealth-creating trade through the increase in high-value-added production, the liberalisation of inter-provincial and regional trade, the diversification of exports, appropriate taxation, the enhancement of trade opportunities offered by regional agreements and the strengthening of regional and international trade negotiation capacities.

Burundi recently ratified the agreement establishing the African Continental Free Trade Area (AfCFTA). Over the next 18 months, modifications or adaptations of the Trade, Investment and Tax Codes are possible to propel application of the agreement and the harmonization of legal and regulatory policies in this area. In addition, Burundi launched a Special Economic Zone, ZES-Burundi, through presidential decree no. 100/29 of February 16, 2017, in Warubondo in the Gatumba zone, Mutimbuzi commune, Bujumbura province. At the meeting of the Council of Ministers of Wednesday, September 8, 2021, the Ministers recommended that a legal framework governing Special Economic Zones be prepared. It is therefore possible that a new law governing Special Economic Zones will be adopted in the next 18 months.

On the financial side, the Bank of the Republic of Burundi has initiated a project to modernise the financial market, through the implementation of capital markets which will allow for the mobilisation and channelling of the savings necessary to finance investment projects. In 2019, the law governing capital markets was promulgated, and this year, a decree appointing certain members of the Board of Directors of the Burundi Capital Market Regulatory Authority was signed. Over the next 18 months, there will be an adaptation of the legal and regulatory framework governing the various stakeholders in this space.

A new law revising law no. 1/11 of July 14, 2009, on the creation, organisation and functioning of the Burundian Revenue Office (OBR) will undoubtedly be promulgated since it is part of the bills being analysed before the National Assembly.Among the bills currently being analysed by the National Assembly, there is also the law governing electronic transactions in Burundi. Economic stakeholders and citizens in Burundi need a legal environment that promotes the creation of a climate of confidence, without which electronic transactions cannot develop.

What impact, in terms of foreign investment (or doing business), will this legislative change have?

In Burundi, investors in the mining sector are mostly foreign companies. Legislative change in this sector will certainly have an impact on foreign investment. Burundi expects a lot from its industrial mining sector as it is the main source of foreign exchange. It is hoped that this change will be attractive for investment but will also be beneficial for the country. Investors should be prepared to take further steps to address the challenges related to new regulations in the sector.

Where do you see the key areas of growth or opportunity for businesses operating in your country?

Burundi's economy is dependent on a number of sectors whose development has an impact on the country’s growth potential. Burundi's National Development Plan 2017-2028 considers the following as growth sectors: agriculture, livestock, infrastructure (energy, drinking water, transport, ICT), and mining. These sectors have been also been identified as priority areas for investment by the Burundi Development Agency. We see opportunities in these sectors given that Burundi's strategic orientation in its National Development Plan 2017-2028 aims to boost them; and that the authorities continue to encourage Burundians to invest in these sectors to further develop the country.

What is the most relevant regional or pan-African economic trend that you expect to see in the next 18 months?

On the trade and investment side, we will be watching for the implementation and impact of the AfCFTA and its interaction with the existing regional bloc.

What do you expect the general business mood to be in your country in the next 18 months?

Government bodies are making efforts to develop the country. For example, the rehabilitation and modernisation of the port of Bujumbura. This project will boost trade between Burundi and the countries of the sub-region via Lake Tanganyika.

The government has also taken the lead in encouraging the population to group together in cooperatives to develop and allow the country to be economically self-sufficient. Potential investors have also been encouraged to join forces by bringing together the means of production to obtain sufficient capital to produce more and manage to transform, or even export, their products. Therefore, in our view the general business climate in Burundi over the next 18 months can be considered hopeful.